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Squawk on the Street

News/Business. Mark Haines, Erin Burnett. Opening bell market action.

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02:00:00

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mpeg2video

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Us 23, S&p 17, Blair 11, Ben Bernanke 11, Washington 7, Volcker 6, Mitch Mcconnell 5, Carl 5, John 5, Erin 5, Bernanke 5, U.s. 5, Nike 4, Marshall 4, Chicago 4, Palm 4, Lamar 4, Obama 3, Snapple 3, Dodd 3,
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  CNBC    Squawk on the Street    News/Business. Mark Haines, Erin  
   Burnett. Opening bell market action.  

    February 25, 2010
    9:00 - 11:00am EST  

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100 million consumers in those wonderful markets contiguous to the territories of cce today, i have no doubt is going to create further scale and further energize our business in the critical western european market, which is another very, very large profit pool. >> let me just add to that. our profit margins in europe, cce, are measurably higher than they are in north america because of a whole variety of reasons. the business model there is more robust and so from a new cce standpoint, clearly, you're going to see dramatically higher profit margins on an ongoing basis. we're obviously from a share owner's standpoint very excited about that. >> mr. brock, mr. kent, thank you both very much for your time. we really appreciate you joining us. >> thank you. >> and for talking to us on this deal day. >> thank you. >> you, too. have a wonderful day. jim paulson, our guest host, thank you for being here. good luck getting back. carl, good luck to you getting back from washington. >> yes. good luck getting home. >> to everybody here be careful
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on the roads out there today. that does it for us today but we will be here tomorrow, rain, snow, shine, whatever may come. that does it for us. right now it's time for "squawk on the street." see you later. breaking news. we are watching color bars. also some snow. >> wow. and several big stories this morning. going clockwise from your top left box, those are color bars. >> but they will be -- >> who will they be? >> ben bernanke. >> okay. senate banking committee. president holds a key health care meeting. that's why we have the white house. what else? >> snow in the northeast. it started as rain this morning for many this morning who are watching but it has turned into thick -- >> wet, heavy. >> idyllic if you're looking to -- >> don't shovel this stuff. >> well, good morning, everyone. it's good to be with you.
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we're here, glad you're here. i'm erin burnett. >> i'm mark haines. >> it says i'm market haines. i want everyone to know it's funny. >> yes, i noticed that. also front and center the number of u.s. workers filing initial claims for unemployment benefits rose unexpectedly last week. >> coca-cola striking a deal to buy the north american operations of its largest bottler. you just saw the ceo there. >> heinz posted $231 million profit. a lot of ketchup. >> futures are sad. >> not good. >> part of the reason for the sadness was an unexpected jump in unemployment claims. >> hum. >> much bigger jump than anticipated. a lot of people are looking through it and saying it's because of all the snow. it was a backlog in filings. you know, but nonetheless, that was part of the issue. >> well, maybe we can find a ray of sunshine through the snowflakes. let's start with brian shactman at the big board. >> hey, mark. i like the pink tie, by the way. we're kind of matching today.
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the softness with equity futures started overseas and more concerns about greece, whether they can cut the budget enough to make a difference. rating agencies come out and a downgrade. the euro got weak. dollar got strong. equities pull back. we have of course durable goods a little stronger than expected but offset as you talked about by the weekly jobless claims. that's why we are where we are at the moment. call it new coke or a change of flavor if you will. the bottom line is this. they are taking over the north american operations. cashless. they're picking up $8 billion in debt. also a $10 per share special dividend to cce shareholders. this is the type of thing where they need flexibility. they're definitely responding to pepsi. very interesting there. dr. pepper/snapple came out with earnings but ubs has this deal as a positive for them. they can have bargaining with distributors. beat by a penny. a little light on top of the guide. well above consensus. that's really what's boosting the stock. heinz talked about a lot of
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ketchup. they beat by a penny. overseas market very, very strong. also want to point out free cash flow was a big boost and gross margins were a big boost as well. finally newmont mining a year ago a penny a share on profits. this year $1.13 a share all on gold prices. >> if you come into times square the subway station every wall is plastered with palm ads. they're having trouble selling those phones. warning this morning. down about 20% this morning. they've lowered revenue guidance. they say they haven't had adoption from consumers and aren't getting as much traction at the carriers. some of the competitors not doing much better this morning. looks like we'll get the big caps all down at least 1% at this hour. we did get good news out of sirius, though. although the stock right now is not changing, has been trading above a dollar ahead of these earnings. it is boosting its outlook. express scripts as well saying its acquisition is generating
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more than a billion dollars of incremental ebitda. they think it'll do that once it's fully integrated. impax looking better after boosting its outlook and steve madden the shoe maker said its retail gross margins increased from 58.7% -- 258.7% from 57% because they didn't have to discount as much. they seem to get the inventory numbers right. let's head down now for inventory numbers at the nymex. >> we're looking at oil prices today that extended their losses from overnight. as we got that jobless claims data earlier this morning we already were seeing lower oil prices due to the weakness in the euro and more importantly the weakness in european equities. keep in mind, though, any time we get jobless data that is negative we often see it hit the gasoline market most severely. this brings into question, really, where is demand and how at risk demand is considering the fact that we are looking at the unemployment levels here in this country, about 24% higher
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than they were a year ago. prices at the pump meanwhile about 40% higher than they were a year ago. consumer confidence is low. we'll get the gdp data tomorrow. a lot of consumers may be walking away from trying to fill up their tanks particularly if they cannot work. look at the dollar. the dollar/oil correlation has broken down so far this year. rick, you'll have pointed that out as well. we are looking at the dollar basically flat right now. meanwhile oil prices down $1.50. over to you in chicago. >> thank you, sharon. indeed the dollar is up a bit. what's interesting is the euro currency is now under 1.35. it's under 1.34.75. we always like to give you or i do pretty objective view of the news. and even though claims jumping up is partially responsible for the continued drop in rates and the deterioration going on in the equities, the nonseasonally numbers are pretty good today. the headline number was up 22,000. but nonseasonally adjusted was
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down 25,000. continuing claims look like it was up 6,000. up to 4.617 million. but nonseasonally adjusted they were down 70,000. if you look at emergency claims, they were down 317,000. what seems to be happening is the numbers i just read look much worse several months ago. the numbers are starting to catch up. so it'll make the employment numbers in the first friday of every month that much more important. mark, back to you. >> all right. thank you, rick santelli. asia mostly down overnight. except for the shanghai composite, which tends to go its own way no matter what's happening in the world. europe, down across the board. hoping to contribute to a lower futures situation here in the states. in fact, we got some big losses there. all of them down more than 1%. big news on the jobs front. waiting for the q & a part of the senate banking committee session with the fed chief to begin. let's get to our senior economics reporter steve liesman.
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he's covering all sorts of stuff. stevie? >> reporter: thanks. today's data highlights, a troubled economic trend we've seen in a lot of reports. strong manufacturing numbers but so far without any hiring. take a look at the jobless claims. they were up to 496,000, up by 22,000. the forward moving average also up. i want to tell you a labor department official is quoted by reuters saying the yet expected rise could reflect a backlog in claims because some of the states couldn't process some of their claims. also, the blizzard kept more workers having to file claims. let's look at the forward moving average. it's not necessarily time to hit the panic button. what you see is it goes way up. i guess we don't have that chart. then it comes down sharply. there it is. there's that kind of blip on the end there. we've come a very long way. maybe this is just a reaction to it. so just a quick snap back here. we'll want to see over the next month or so what happens to these claims numbers.
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the durables numbers were very strong, a sign of the strong manufacturing that's out there. up 3%. december was revised upwards. and the ex-transportation was down 0.6%. looking inside some amazing details, what we have is this surge in civilian aircraft orders and the reason for that is we had two months where we knew that boeing was selling planes but it wasn't showing up in the data. it was like a minus 30 and minus 40. this is big catchup inside this month's numbers. general machinery was down. business investment down but had been up for several months. we think the business investment story still remains intact. that is something that fed chairman ben bernanke said yesterday as one of the positives for the economy. take a look at the new orders. you can see what's really interesting about this rebound here is compare it to the '02-'03 rebound which was much more halting. this is straight up. for those looking for a v-shaped recovery i don't know but like on the right-hand side of my screen and i see a v there. finally year over year we are above where we were last year on
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new orders for durable goods. so that's at least one good sign. unfortunately, that same chart when it comes to jobs is not a v-shape at all but more of a flat line. fed chairman ben bernanke heads into day two of the semiannual testimony to congress. having delivered a clear message on rates. they're going to stay low at least several months. overlooked yesterday and getting more attention today is regulatory reform the fed's pitch to keep the fed as a major banking regulator. the senate is considering stripping those powers as part of a broad overhaul of the nation's banking laws so look for much more discussion today on regulatory reform. erin, we heard this morning from senator corker that he and warner have agreed on the issue of resolution authority so we'll hear that. by the way, tomorrow don't miss chicago federal reserve president charlie evans will be on "squawk box." ms. burnett? >> with mr. liesman. >> with myself and my other "squawk box" crew. >> with everyone yes. sometimes you're a little too humble, steve. >> me? president obama will be meeting with key lawmakers on
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health care today. ben bernanke is at the senate banking committee. that's why you see christopher dodd there. that other picture of the white van is outside blair house right across the walkway from the white house where the health care summit is going on. >> when is that on? >> all day it's going to be on. >> oh. >> it's going on all day. >> what channel? >> i -- we are taking parts of it. i don't know how much. we will take ben bernanke in full. >> okay. >> and then we'll look at the blair house. >> bernanke and health care both have a big impact on your life and your money. we have it all covered for you. don't go away.
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president obama hosting an unprecedented meeting on health care at the top of the hour. and right now, john, you can see the other thing that's going on which, of course, is ben bernanke in front of the senate banking committee giving his testimony, i believe, right now, which we should emphasize is the same testimony which he gave yesterday. >> looks to me like he's answering questions. >> i think he just started -- dodd probably put the hearing in session right? when he starts taking questions, though, we will go obviously and take them live cover to cover. john harwood and carl quintanilla are in washington covering it and what should we expect? what are you looking for? i know you've been speaking to people all morning, carl. >> reporter: we have, and i think there are two schools of thought, erin. one is as politico says, john, it could be a very clarifying
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moment for lawmakers and the american people or it could be the biggest pr disaster since geraldo rivera opened al capone's vault. >> well, i don't know what the disaster potential is. we know where both sides are. both sides have staked out their points or positions. >> guys? >> yes, ma'am? >> sorry. go ahead. >> and so i think they'll lay those out and then they'll count votes and figure out what they can get done and as you and i talked about this morning, carl, if the democrats can get the votes to pass a comprehensive bill using reconciliation in the senate, they don't need it in the house, they will do it. if they can't, then they're going to scale back and drop back and try to do something more modest. >> and two things there. we've heard, obviously, disparate views on the vote count between democrats and republicans. we keep hearing from the likes of senator judd gregg that if they try to do reconciliation in the senate it will be subject to so many tests and it's got to be
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regarding to the budget, not extraneous, that it will be a shadow of itself even if they can get it done. >> first of all, i defer to senator gregg's expertise but when i talk to democrats what they say is it will take several weeks to prepare a reconciliation vehicle to get all the parts scored so that they can determine that it meets the parliamentary test. it is subject to challenge so they have to be very careful. that's why you don't use reconciliation unless you have to because it makes it more difficult. but they believe that having passed the underlying bill in the senate with the exchanges and all the things that you couldn't do through reconciliation, they think they can make the changes necessary to get majorities in both chambers through the reconciliation process and we'll see what happens. some of this depends, carl, on the senate parliamentarian who doesn't often wield a lot of clout but what'll happen is the democrats will put a bill down. republicans will object. the parliamentarian will rule and then you see if you've got to try to vote to override it.
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>> guys, that is a live shot you're watching, the exterior of blair house, the nrcc i think is also -- has a web video out mocking the blair house calling it the blair house project. the video sort of shaky like the blair witch project was so the play on words regarding "blair" will continue this morning, guys. >> i like it. i like the somewhat suspicious looking white van parked in front of it. >> yeah, who's in there? >> i know. what's going none there? all right. thank you, guys. with the president keyed in on health care, congress on the fed and economy, treasury secretary timothy geithner, remember him? all of a sudden out of the spotlight? well, he's still there and he's focusing on financial reform. we're joined now by hampton pearson. hamp? >> well, mark, ironically as a matter of fact, just down the street from blair house in a couple hours over at the treasury department secretary timothy geithner will face off with representatives from the top lobbying groups in the financial services industry.
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invited to that meeting leaders of the american bankers association, independent community bankers, the financial services forum. the u.s. chamber representing securities industry and ici speaking for mutual funds. the early guidance from treasury and some expectations on the part of participants is the secretary wants to make the case for a sense of urgency in passing a strong financial regulatory reform bill saying the markets and the economy need certainty as to what will be the future rules of the road after the worst financial crisis in a generation. and regulatory reform, he is expected to say, is part of building the foundation for economic growth. now, the participants say they also expect a bit of saber rattling with perhaps the treasury secretary suggesting perhaps they shouldn't just lobby against reform for the sake of lobbying. for the industry representatives as far as major hurdles there is a united front in terms of opposition to a stand-alone consumer financial protection agency. it is as close to a deal breaker as anything out there but they
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all say they are pro reform. all eyes are also focused on the emerging senate plan. can finance committee chairman chris dodd and senator bob corker come up with a compromise? as you heard in the last half hour on "squawk box", senator corker said significant progress is being made. when i talked to him afterwards he said it's kind of like a football team in the red zone. you're close to the goal line but you can still have that big turnover that blows the whole thing up. erin? >> thank you very much, hampton. let's get the word on the street now as we prepare for the opening bell and of course all of those meetings to begin. warren meyers joins from us the floor of the big board, ceo of walter j. dowd. good to have you with us, warren. we appreciate it. >> my pleasure. good to be here. >> there are a lot of different things going on today and it could be hot air but people are listening because there's the chance that something significant might happen. >> well, you know, i can't believe you'd even hint at the fact that hot air might be coming out of washington. i mean, i've never heard
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anything that crazy. no, i -- you know, i think the testimonies you'll hear will be very subtle and low key. you've got to really dig deep to try and find any nuggets of anything that might give you an indication of anything other than what we already know. you probably are not going to find much that way. i think it's going to be more just entertainment and watching as opposed to substantive speech today. >> what are you looking at on the market? this is going to be a significantly lower open. we haven't seen such a weak futures market in quite a while. >> no, we haven't. i talk about this -- talked about this last week saying we're ending the earnings season and now will focus on the economic data primarily and some of the political issues. the data we've seen over the last couple days certainly does not look good. the jobs numbers today was very weak. the housing number yesterday was horrible. and i think, you know, all of that combined now is giving a pretty negative input to this market at least for this morning and we're looking for a nice drop right off the bat. >> all right. warren meyers, thank you very much, sir. >> my pleasure. >> let's check the s&p minis.
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we are ten minutes out of the opening bell. they look pretty stinko. we're going to drop significantly. obviously more than 1% at the open if things stay this way. next, the buzz beyond the big board. and we're monitoring day two of big ben talking. we will take the q & a session as soon as it starts. >> plus, we are waiting for president obama to talk about health care with his meeting and treasury secretary geithner with his meeting with the banks on financial regulation. this is sort of a perfect storm of busyness for the markets.
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a snowy picture of jersey city, new jersey, mark. >> oh, yeah. that's down by the ferry terminal where i catch my ferry every day. >> let's get an update on the storm tracker from the weather channel's jeff morrow. >> yeah, guys, yet again we have to deal with another mess in the northeast. and new york city is right on the line right now. to the east it is rain out over long island. folks out there wondering what snowstorm but once you head west of new york city, that's when you get into the heavy snow from the city right on over to jersey and then into eastern pennsylvania. right now it looks like probably northeast pennsylvania up into the poconos and catskills. binghamton 1 to 2 feet. trenton, new jersey, could get a foot. philadelphia adding to their epic season, 6 to 10 inches. even in new york city 6 to 10 very wet inches of snow. the farther east you head into
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new england it looks like it will stay mostly rain. hey, it's february. we're not done with this winter yet. >> thank you very much. let's get the buzz beyond the big board right now. dave, good morning. you have the bad fortune to be with us when bernanke and the president and geithner are all busy doing stuff we have to cover, so tell me what's going on here. looks like we'll take a hit today. we've been up a hundred, down a hundred. what's happening? >> big hit, like you said. the jobless claims number was horrible. the sovereign debt worries. they're worried about s&p lowering, moody is lowering the greeks' rating. doesn't look good. going forward you'll see the big banks i think will start to lower their targets. i don't think it's feasible. >> we need to be cautious here? >> definitely need to be cautious. i'm just curious, on february 5th we put in a low of about
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1044 on the s&p. we rallied actually 10% in the semis off that low and actually the russell rallied about 9%. i'm interested to see if we hold that 1044 level. >> all right. that's what we'll watch. thanks, dave. appreciate it. final countdown to the opening bell just on the other side of the break. also we're waiting on a bunch of stuff. >> that's right. president on health care, financial reform, bernanke. they're all going to be talking. we're back with that.
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it's time for fresh thinking. it's time for td ameritrade. you are watching cnbc "squawk on the street" live from the financial capital of the universe. the opening bell is going to ring in 1:20. so quickly through the headlines at this hour. jobless claims jumped unexpectedly and that really sent the futures into a tizzy to the down side. coca-cola making a deal to buy the biggest north american bottler. i-tunes passes the 10 billion mark in songs sold online.
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they're catching up to mcdonald's. >> and in a minute before the bell let's bring in larry levin president of trading advantage. what do you think about this open? you worried about its weakness or do you think we can overcome? >> i think there will be a little weakness on the open. obviously we're down about eight points in the s&ps and some of the other stock indexes sitting on the lows of the overnight session. should be interesting to see if we can stay below those lows during the day. i think the selloff will continue throughout the day and maybe we could see a 10 to 15-point, maybe a little more in the s&ps. 1075 is the level that i think is the best support. if we pick up that momentum we could get all the way down there in the s&p today. >> thank you very much. we'll be watching that level and this open. >> what level? >> 1075 he said for the s&p. >> oh, okay. then we've also been told to watch 1040 or 45. so a lot to watch on the down side. right now we'll watch the opening bells. two, one -- here at the big board, investor relations
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officers from nyse listed companies. and at the nasdaq, usa network's 2010 character approved awards. >> huh? >> i don't know. >> well, it's a great network. part of the wonderful family of the best networks on earth, nbc universal. we are not biased. we are just truth tellers. markets open down about 96 points right off the bat. we knew we'd have a lower open. let's get around to our market reporters and get the names to know. find out over the next couple moments we're already dropping now down below a hundred, 110. brian shactman you're first. >> we're down 110 right now. we were weak early on in the premarket trading because of the euro getting weak and the dollar getting strong and then those jobless claims came out.i] even with the durable goods being decent and the dow futures went down 50 points or so over the next half hour or so. so that's why we started. we'll start with coke and cola enterprises.
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unthe deal. they're taking over the north american operations, a cashless deal. cce offered 2550, up 650 from the close yesterday so it's up significantly. supposedly a special $10 dividend for cce shareholders. coke wants, following pepsi, trying to stay nimble, getting new beverages to market. dr. pepper, snapple, good earnings. guidance good. ubs saying, listen, this is a good deal for dr. pepper/snapple. quick note on retail, kohl's, good consensus. below consensus. they came out and said february sales look extremely strong. and finally, down more than 5% today, game stop ceo going to walmart. we don't know for what position. that stock getting hit hard. >> brian, we are off across the major indices. palm a big weight on the nasdaq -- or 22% right now after warning. this comes after three big firms downgraded them, worried that
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their sales were sluggish this morning. morgan stanley in fact had downgraded them just ahead of that warning. apple, mark told you, they've now -- and the mcdonald numbers, 10 billion songs sold but one analyst says, hey, they don't tell you about their numbers as far as earnings. apple, rim, google, all of the big caps are trading to the downside at the open. express scripts having a good day after posting better than expected earnings and boosting. jeffries upping the price target to $115 a share. good times these days for health care i.t. and a hepatitis drug trial and the hepatitis drug that they have apparently no better than the placebo. meantime sirius off 4.5% after posting better than expected earnings and dollar tree which had good earnings yesterday getting an upgrade this morning, getting a little bit more traction in a downmarket. let's head downtown to the nymex now with sharon. >> it's no surprise with the dow down 163 points right now that we're seeing oil prices down
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more than $2 both in new york and in london. keep in mind we have been following equities very closely here in the oil market and we continue to do so this morning. and also keep in mind those jobless claims numbers really hitting the gasoline market hard. it's hard to believe that there's going to be much demand when you look at the type of jobless numbers that we've seen as well as consumer confidence numbers that came out earlier this week. keep your eye on the technical levels as well in terms of brent crude. we've already broken through a key support level around 76 1/2 so continue to watch those levels there and then a lot of investors coming into the start of the year wanting diversity, getting into commodities. they're not finding it. look how closely the commodities index has been following the s&p 500 so far this year, continuing to do that in today's session. we'll also keep a close eye on natural gas because we are going to get that storage report coming out at 10:30 a.m. we are seeing a slide again in natural gas futures and there are some traders saying that due to the technical breakdown that we're seeing here in natural gas we could see natural gas futures
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hit the $4 level. rick santelli, to you in chicago. >> thank you, sharon. interest rates are a bit lower but really the big story today among the traders is, jobless claims. many really follow the nonseasonally adjusted. what they've seen is that nonseasonally adjusted and the actual numbers are catching up but whether it's distorting the whole process. so the question we've posed is why have equities deteriorated, doubled down just in the last hour? you know, randy, what do you think is going on? >> it is the health care issue. >> many believe it's the meetings going on. we have huge meetings. whether health care, the exit strategy in the fed, whether it's consumer protection, what do you guys think? you think it's initial jobless claims moving the market? tommy? >> no. wolf man? >> i think everybody's waiting for the health care and the taxes. everybody is going to preserve wealth until they find out what's going to go on in government. >> well, this is universal. i wish i could walk around the floor more. getting back to the marketplace,
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it's interesting to watch how the dollar index is responding today because murving king very respected in this country, maybe next to greenspan the most respected central banker. his comment we learned something during the crisis. governments are going to bail out. his reference of course was greece. mark and erin, back to you. >> thanks. lawmakers starting to arrive at blair house, looking at the picture there. the white van is still there. we've been joking about that. those are just government vehicles. there is a special health care summit meeting which will go on with the president right there in blair house. we'll be watching it closely. we have cameras there. we will know what happens. we will be listening. the president will be there likely speaking at 10:00 a.m. and you'll hear that but now let's get to the question and answer session on the other side of town with ben bernanke. >> the data we received for january. >> yeah. as congress grapples with the need for job creation and indeed to reduce our mounting deficits
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and national debt, can you talk about the impact unemployment and the budget imbalance could have on inflation? >> well, currently, senator, inflation looks to be subdued. we're not expecting inflation to rise significantly in the near or medium term. on the one hand, the unemployment and the low use of utilization, the low rate of utilization of labor has been a force keeping wage gains very low, which of course from a worker's perspective is a problem. from the perspective of employers, they are seeing both very slow wage growth and because of all the cuts and cost cutting measures, they're also seeing very strong increases in productivity, which are quite remarkable. so the combination of slow wage growth and high productivity gains mean that the unit labor costs, the costs of production are if anything falling for most
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firms. so that together with very weak demand in many industries means that firms have very little ability or incentive to raise prices. which would of course tend to moderate inflation. on the deficit the impact on inflation in the near term i think is limited. of course, it is important that congress, the administration find solutions to our longer term debt problems. otherwise it's conceivable, and i'm not anticipating anything in the near term, but it is conceivable that it could lead to a loss of confidence in aspects of the u.s. economy. it could affect interest rates. it could affect the value of the dollar and those things could directly or indirectly affect the state of the economy, the recovery, and of course the rate of inflation. >> as the federal reserve begins to wind down purchases of mortgage-backed securities what steps, if any, are needed to
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ensure stability in the housing market during this transition? >> well, as you know, senator, we are at this point planning to end our purchases at the end of this first quarter. a question is to what extent will mortgage rates be affected by the end of our purchases. of course even though we have stopped purchases we still retain our balance sheet, $1.25 trillion of mortgage backed securities, and we believe the holding of those securities off the market in itself will tend to keep mortgage rates down. we don't know for sure how much mortgage rates will respond to our leaving the market. so far there's little evidence of much change in mortgage rates but obviously we'll have to keep monitoring that. if there )##ñ a response which seems to threaten the broader economic recovery we certainly would be prepared to review that decision. but, again, at the moment it
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doesn't seem to be that a large change in mortgage rates are in -- or any effect on housing is evident. >> although the minutes of the january 26-27, 2010 federal open market committee meeting indicate that core measures of inflation have been stable, they also indicate the headline, inflation with swings in energy prices and the core inflation may have been held down by unusually slow increases in the price index or shelter due to the housing crisis. do you think that potentially higher future energy and housing costs pose an inflationary threat in the medium run? >> we believe that the underlying trend of inflation, given stable expectations, given
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a very weak economy, looks to be subdued. of course, we monitor energy and commodity prices very closely and they can vary substantially depending for example on the strength of the global recovery. recently, energy crises have been roughly stable and futures prices don't indicate an expectation of sharp increases in the near term. so again, we'll continue to monitor energy prices, but currently at least they're not presenting a major inflationary threat. the very high vacancy rates in rental properties are keeping rents down as well as vacancies in homes. our anticipation is that shelter costs are going to remain quite subdued for sometime. >> senator? >> thank you. chairman bernanke, this committee continues as you well know to wrestle with the financial reform and the role of
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the fed has been a significant part of that debate as you're well aware. chairman dodd has previously proposed stripping the fed of its regulatory authority, allowing you and your colleagues to focus on your monetary pol y policy, lender of last resort and so forth. on the other hand some on the committee have argued in favor of allowing the fed to retain some type of regulatory authority over the largest institutions, perhaps some of the others. how do you see such an approach, as a net positive or net negative here? and what would you do as chairman of the board of governors of the fed if the will of congress was to give the fed another opportunity to be a regulator? what would you change, considering all the problems that were had in the last seven
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years in the regulatory process? >> thank you, senator. as you know, i think that stripping the federal reserve of supervisory authorities in the light of the recent crisis would be a grave mistake. for several reasons. first, we've learned from the crisis that large, complex financial firms that pose a threat to the stability of the financial system needs strong, consolidated, supervision. that means they need to be seen and overseen as a complete company reflecting the developments not only in their banks but also in their securities dealers and all the various aspects of their operations. a bank supervisor which focuses on looking at credit files, is not prepared to look at the wide range of activities of a complex international financial firm. the federal reserve in contrast by virtue of its efforts in monetary policy, has substantial knowledge of financial markets, payment systems, economics, and
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a wide range of areas other than just bank supervision and in our stress test we demonstrated that we can use that whole range of multidisciplinary skills to do a better job of consolidated oversight. by the same token, we need to look at systemic risks. systemic risks themselves also involve risks that can span across companies and into various markets. there again you need an institution that has a breadth of skills. it's hard for me to understand why in the face of a crisis that was so complex and covered so many markets and institutions you would want to take out of the regulatory system the one institution that has the full breadth and range of those skills to address those issues. let me mention your second point. i think your point is very well taken. as i discussed in the -- in my testimony we have taken very, very seriously both changes in our performance, changes in our way we go about doing supervision but also changes in
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the structure of supervision and we've made very substantial changes in order to increase the quality of our supervision to increase our ability to look for systemic risks and to use a multidisciplinary, cross-expertise platform to look at these different issues. so we are very committed and i'd be happy to discuss with you through a letter or individually more details. i guess i would also like if i might just have one more second, the federal reserve, of course, made errors and made mistakes in the supervisory function but we were hardly alone in that respect. >> what have you learned? i guess that's the question. >> well -- >> and the board of governors. what have you learned? >> we've learned several things. we've learned, first, that regulations need to be tougher and we've led the effort to strengthen capital requirements, strengthen liquidity requirements to put more controls, risk controls into these companies.
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we have learned that we need to have a more risk and systemic oriented approach and we've changed our approach to do that. we've gone at this very extensively. >> mr. chairman, i want to briefly get into the volcker rule and size limits. the administration recently proposed as you well know that limitations be imposed on banks and bank holding companies with respect to trading activities including proprietary trading, the so-called volcker rule. the administration also proposed placing limitations on what was referred to as, quote, excessive growth of the shares of liabilities at the largest financial firms. what are your views on the volcker rule proposal and separately on their proposal to limit excessive growth in the firms' liabilities? and do the regulators right now have the power as some people have suggested to invoke the volcker rule or would you need
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legislation? if the congress so thought it was necessary? >> senator, first i think we would all agree that we don't want companies taking excessive risks when they are protected by the government safety net. so that's very important. there are obviously multiple ways to address those risks and they include capital requirements and we've increased capital requirements as well as for example restrictions on executive compensation which affect willingness to take risks. if you go about imposing the volcker rule, i think it would be difficult to do it on a purely legislative basis because of the potential for having unintended consequences. so while on the one hand you may want to restrict purely proprietary trading you also want to distinguish that from say aappropriate hedging behavior. >> you have to be careful don't you? >> you have to be careful from
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unintended consequences. hedging, a market making, customer activities can involve ownership of securities for a period of time. i do think if you want to go in that direction you should at least allow some role for the supervisors to make determinations about individual activities. i think it would not be inappropriate if a supervisor determines that a company doesn't have the managerial or risk capacity to appropriately manage a particular activity for the supervisor to be able to restrict that activity. i would argue that we have that authority to some extent now but if congress twoonts rewants to that of course it could never hurt. >> thank you, mr. chairman. >> senator reid? >> thank you very much, mr. chairman, and welcome, chairman bernanke. the followup on the volcker rule, how would you implement it if you were to do it through your regulatory process? >> we would do it as part of our
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overall risk management assessment. we would look at the range of activities that the company engages in. there might be some activities that would be explicitly prohibited by legislation, say perhaps owning a hedge fund for example, but if there are other activities such as purchasing of, say, credit default swaps, i think it would be appropriate for the supervisor to first of all ascertain that the use of credit default swaps is primarily intended to hedge other positions and therefore is overall a net reduction in risk for the company as opposed to an increase or speculative increase in risk. secondly, even if the purposes of the program are in some sense legitimate, there's still the question of whether the company has adequate managerial risk management resources to properly manage those risks. what we saw in the previous
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crisis, i think this is one of the things we really learned, is that many large, complex companies didn't really understand the full range of risks they were facing and as a result they found themselves exposed in ways they didn't anticipate. so if a company didn't have strong mismanagement controls, and a strong culture of system -- enterprisewide risk management i think that would also be grounds for the supervisor requesting either substantial strengthening in those controls or eliminating those activities. >> just an observation. those controls are much more rigorous today but they tend to erode over time. particularly as these unpleasant crises fade. and also the capacity of the regulators, the federal reserve and other regulators, to make very nuanced judgments about management, etcetera. there is really a question of
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regulatory capacity as well as managerial capacity that at least the last several months suggest that it won't be answered by simply sort of letting you do what you inherently can do now. >> well, certainly, congress can provide guidance about what they would like to see shut down or make specific statutory recommendations or statutory la laws. but in another -- i'm sorry. i lost my train of thought. oh, yes. sorry. i just recalled. i think another part of the reform package that's very important is the resolution authority and measures taken to address the too big to fail problem. if you can address the too big to fail and get market firm so investors will have incentive to
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address those concerns it would be not a panacea but additional factor helping the regulators in the firm make good decisions. >> underlining this discussion of the volcker rule is a more general principle. what risks should taxpayers support? i think as a consensus that traditional commercial banking which everything has a risk has historically been supported and should be supported but the ability to access your credit facilities. >> you are listening to ben bernanke. in the upper, smaller box on your screen you're looking -- the president will be coming out in a couple moments. that's over by the executive office building and then walking across the street to the blair house where he will join the meeting which you see below which is currently in session or just beginning. nancy pelosi there. and they will be obviously talking about health care. we're waiting for the president to walk out and walk across the street. in the meantime the dow got about 164 points right now right at the low of the session. we got the sharply lower open we expected. we'll take a brief commercial
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break and come back to ben bernanke's testimony in a moment.
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oo. that's a little ugly. now down 153. 1.5%. 1.5%, roughly across the board as we continue to deteriorate. what set it off was the jobless claims numbers but obviously this is about more than just that. >> yes. now we're just slightly off the lows, about 164. obviously watching to the other big place in focus. you are looking at a picture of basically an area i believe in between -- >> pennsylvania? >> yes. and the president is going to be crossing from the white house to the blair house to go into the meeting with the bipartisan panel or commission. as you can see on the other side of your screen, on the left of your screen, that -- where they're going to talk about health care reform. simultaneously happening across town is what? >> feel like a juggler.
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bernanke. >> yes. >> and your friend -- >> there's mitch mcconnell or not mitch mcconnell. bunning. sorry. jim bunning, senator from kentucky. never a friend to fed chairman. >> no. >> we'll be right back with more.
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breaking news again. fed chairman ben bernanke on capitol hill taking questions from members of the senate banking committee. but then again you knew that. president obama about to address congressional leaders at the blair house. speaking about health care reform. but then again, you knew that, too. no, that's not the president. the president doesn't walk like that. >> this is one of those things where we wait and any second they say he's coming! >> that is the gate if i'm not mistaken near the executive office building. >> right. over on the side. >> anyway, i -- >> see now i think he's coming. every one of those clumps. >> he walks more gracefully than any of these people are walking.
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>> i hope our viewers are staring here too. it is sort of a fun game. we were told he is in this clump so -- there he is. the one waving and walking gracefully. you're right, mark. >> oh, my goodness. it's the president. on pennsylvania avenue in washington. what a surprise. >> oh, my lord. he lives there. says he's always got plans. i heard him yelling. >> bring in harwood, he says. and who? oh, carl? >> and carl. we got the vice president and the president. >> we just saw them cross the street. my heart is aflutter. what do you say, guys? >> a short commute to work. we know that, john. right? >> you know, i think if mark had any more breaking news he couldn't handle the excitement. >> i am telling you the floor around here is littered with broken news. >> you guys have been talking about the live shot on the right side of your screen.
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interesting watching the body language, the likes of senator barrasso next to dick durbin, mitch mcconnell next to kathleen sebelius. interesting the stage craft, john, has been a very difficult negotiating point. right? the way this whole thing was arranged. >> absolutely. and one of the questions is going to be how much of an audience is there going to be for the stage craft? they're going for six hours. some people are going to be watching for a long time. some people will be dipping in and out. when you had the president going into the lion's den to see republicans in baltimore a few weeks ago it was novel and drew a ton of attention. i'm not sure whether this, especially since there is so much expectation that the results are predetermined i'm not sure how much of an audience there will be for it. >> do you get a sense, does it feel like they are a class awaiting the professor? the way the president is coming in it sort of looks like that a little bit. >> well, a little bit and also a couple armies waiting to clash with one another because we know
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there is going to be a clash. unless something dramatic happens in this session which i do not expect, everybody is immediately going to retreat to their caucuses once this thing is done and then the democrats are going to see if they can amass the clout necessary to get this through. republicans are trying to stop it. it's a very simple equation. republicans have 41 votes in the senate. that gives them a leg up on what they had before. they don't have very many votes in the house of representatives and democrats will see if they can roll over. >> earlier this morning mark warner was with us and suggested nah maybe some new blood go to meetings like this. the invites went out how? and why? >> essentially they're picking the chairman and ranking members of the committees that deal with health legislation so you see henry waxman from energy and commerce who moved the bill. you see chris dodd from the health committee in the senate which also moved the bill and you see all of the members who
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have been playing key roles in this as well as the leadership of course nancy pelosi and harry reid. >> makes you wonder. >> go ahead, mark. >> i was just going to ask, aside from c-span is anyone carrying this? >> it's on c-span 3. >> c-span 3. >> yeah. >> whoa. >> it's on cnbc at this moment. but for how long? >> wow. what's on one and two? >> does congressman boehner have a tanning bed? >> his skin tone is a topic of much discussion in the nation's capital. >> that was one of the president's jokes at a press dinner not long ago. >> colors that occur naturally. >> it was not a color that appears in the natural world. >> guys, hold on just a second. we'll check the markets. that is a big story as well and not a good one. right now the dow is down 166 points. the s&ps are off 17.
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the nasdaq has lost 33. brian shactman is here on the floor with us. give us an update. >> i've talked to a lot of traders this morning, mark, and two i have a lot of respect for, been decades on the floor, gave me two different theses for what's going on. one said this is 70% about the euro and greece, 30% about jobs. the other trader said this is all about job fears. so we're flirting with the lows of the session at 160. the whole dow is down. i want to look at three names in particular. caterpillar, jp morgan, and ko. of course you have caterpillar kind of a cyclical play, global growth. jp morgan financials. of course weak today along with materials, industrials, energy tech. really you name it. and coke is selling off on that acquisition of coca-cola enterprises north american operations. also want to point out the commodities stocks are getting hit with a firmer dollar like we talked about with the soft euro. ak steel, the oil space is weak. newmont mining is up, just
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incredible earnings. they've made 4 million, one cents a share the same quarter a year ago and 588 million this past quarter. gamestop the worst name in the s&p losing its cfo and a couple analysts' downgrades today. let's check on the tech sector with bertha coombs at the nasdaq. >> tech is falling along with, not worse today as far as the nasdaq composite over the last few weeks when you've seen a selloff and seen it worse on the nasdaq composite. today obviously the big drag is palm. mourning for its next quarter and for the fiscal year. it's interesting on tuesday you had a number of analysts downgrade the stocks concerned the palm pre isn't getting traction. that's what the company said. morgan stanley cut the stock about an hour before the company came out and warned. we do have about four stocks within the nasdaq 100. that's it that are trading to the upside. one is express scripts reporting
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in better than expected earnings. health care i.t. is one area that's been strong and because of we're after the one-year mark on the recovery act some of that money is going to start coming out late ther year. milan labs putting in better than expected earnings up 5.5%. down to sharon at the nymex. >> oil prices are still down nearly $2 but keep in mind we're at the top end of the range that we've been trading in for the last several months between $70 and $80 a barrel. traders i talk to say they're grappling with a number of issues here. on the one side they're looking at whether or not the economic recovery and inflation will ensue or on the other side are we going to see more tough positions here in this economy? keep in mind, though, bernanke's comments today. he talked about inflation being rather subdued for some period of time. now turn it over to mark and erin. >> all right. >> let's listen to the president. he's speaking. >> thank you so much for participating today.
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i am very grateful to all of you because i know how busy you are. what i want to do is make a few brief remarks on the front end and we'll allow leadership from both of the house and the senate to make opening remarks and then we will dive in. last year obviously was one of the toughest years we've had on record. and all of us in one way or another were devoted to focusing on breaking the back of the recession, restoring economic growth, putting people back to work. we've still got a long way to go and so i know both the house and the senate are interested in ho forward? how do we create more jobs? i was very pleased to see a glimpse of bipartisanship in the senate recently in passing a jobs bill and i hope that continues and i know there are going to be some additional pieces of legislation moving forward around for example making sure the small businesses
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can get financing. those are the kinds of things that i think all parties and both chambers should be able to agree to. so i'm very much looking forward to working with you on all of those issues. i have said repeatedly, i said at the state of the union, i said last night, when i was meeting with the business round table, that in addition to dealing with the immediate challenges we face in the recovery, it's absolutely critical that we also look at some fundamental structural problems in our economy that are hurting families, hurting businesses, and having an impact on the exploding deficits and debts that the federal government but also state governments are carrying. and it's for that reason that last year around this time actually i hosted in the white house a health care summit and
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indicated to congress that it was absolutely critical for us to begin now moving on what is one of the biggest drags on our economy and represents one of the biggest hardships that families face. some of you know that i get ten letters out of the 40,000 that i receive every day for me to take upstairs to the residence and read every single night. and these are letters from all across the country, constituents from every walk of life, and i can tell you that at least two, sometimes five of the ten letters relates to the challenges that people are experiencing in health care every single day. i'll get letters from parents who -- whose children have preexisting conditions and maybe those children were able to get health insurance when they were young but now they're grown up, about to move out, and can't get insurance no matter what job
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they find. i hear from small businesses who have just opened up their new rates from their insurance company and it turns out that their rates have gone up 20, 30, some cases 35%. i hear from families who have hit lifetime limits and because somebody in their family is very ill at a certain point they start having to dig out of pocket and they are having to mortgage their house and in some cases have gone bankrupt because of health care. so this is an issue that is affecting everybody. it's affecting not only those without insurance but it's affecting those with insurance. and when you talk to every single expert and you just talk to ordinary people and you talk to businesses, everybody understands the problem is not getting better.
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it's getting worse. right now it's projected that premiums for families with health insurance, not people without health insurance, but with health insurance, will almost certainly double over the next decade just as they doubled over the past decade. in the individual markets, it's even worse. businesses are having to make decisions about just dropping coverage all together for their employees. if they're not doing that then the money that they are spending on health care is money that otherwise could have gone to job creation. i don't need to tell people here about the effects on the federal budget. we've got people who have been working a very long time on figuring out how can we control the huge expansion of entitlements? almost all of the long-term deficit and debt that we face
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relates to the exploding costs of medicare and medicaid. almost all of it. and that is the single biggest driver of our federal deficit and if we don't get control over that we can't get control over our federal budget. now, i'm telling all of you things you already know. maybe more personally i should just mention the fact that i now have about as good health care as anybody could have. i got a doctor right downstairs. and all of us, when i was in the senate and all of you as house and senate members, have good health care. but remember maybe when you were younger, when you were first starting off, i can certainly remember malia coming into the kitchen one day and saying, i can't breathe, daddy, and us having to rush her to the emergency room because she had asthma. or sasha when she was a baby
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getting meningitis and having to get a spinal tap and being on antibiotics for three days and us not knowing whether or not she was going to emerge okay. in each of those instances, i remember thinking, while sitting in the emergency room, what would have happened if i didn't have reliable health care? my mother, who was self-employed, didn't have reliable health care. and she died of ovarian cancer. there was probably nothing that modern medicine could have done about that. it was caught late and that's a hard cancer to diagnose. but i do remember the last six months of her life insurance companies threatening that they would not reimburse her for her costs and her having to be on the phone in a hospital room arguing with insurance companies when what she should have been doing is spending time with her family.
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i do remember that. now, everybody here has those same stories somewhere in their lives. everybody here understands the desperation people feel when they're sick. and i think everybody here is profoundly sympathetic and wants to make sure that we have a system that works for all americans. you know, i was looking through some of the past statements that people have made. and i think this concern is bipartisan. you know, john mccain's talked about how rising health care costs are devastating to middle class families. chuck, you've been working on this a long time. you've discussed the unsustainable growth in medicare and medicaid in our budget. mike enzi who's worked on this, you know, partnered with ted kennedy on a range of health care issues as chairman of the
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committee, you know, you said that small businesses in your home state are finding it nearly impossible to afford health care coverage for their employees. and you said the current system is in critical condition. and, mitch, you know, you've said that the need for reform is not in question. and obviously there are comparable statements on the democratic side, as well. so here's the bottom line. we all know this is urgent. and, unfortunately, over the course of the year, despite all of the hearings that took place and all of the negotiations that took place and people on both sides of the aisle worked long and hard on this issue and, you know, this became a very ideological battle. it became a very partisan battle. and politics, i think, ended up trumping practical common sense. you know, i said at the state of
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the union and i'll repeat. i didn't take this on because i thought it was good politics. this is such a complicated issue that it's inevitably going to be contentious. but what i'm hoping to accomplish today is for everybody to focus not just on where we differ but focus on where we agree. because there actually is some significant agreement on a host of issues. now, i've looked very carefully at john boehner's plan that he put forward. i've looked at, you know, tom coburn and senator burr's plan that's been put out there, paul ryan has discussed some of the issues surrounding medicare. i've looked at those very carefully. mike enzi in the past you've put forward legislation around small
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businesses that are very important and so when i look at the ideas that are out there, there is overlap. it's not perfect overlap. it's not a hundred percent overlap. but there is some overlap. what i did, what the white house did several days ago, is we posted what we think is the best blend of the house and the senate legislation that's already passed. the basic concept is that we would set up an exchange, meaning a place where individuals and small businesses could go and get choice and competition for private health care plans, the same way that members of congress get choice and competition for their health care plans. for people who couldn't afford it, we would provide them some
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subsidies. but because people would have some pooling power, the costs overall would be lower because they'd be in a stronger position to negotiate. we think it is a plan that works with the existing system, the employer-based system, the private health care system, but allows a lot of people who currently don't have health care to get health care. more importantly, for the vast majority of people who do have some health care it allows them to get a better deal. we also have some insurance reforms in there that, for example, prohibit people who have preexisting conditions from being banned from getting coverage. we also talk about how we can help to make the medicare system more effective and provide better quality care. in each of these cases, there are corresponding ideas on the
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republican side that we should be able to bridge. so i promised not to make a long speech. let me just close by saying this. my hope in the several hours that we're going to be here today, that in each section that we're going to discuss, how do we lower costs for families and small businesses, how do we make sure that the insurance market works for people? how do we make sure we are dealing with the long-term deficits? how do we make sure that people who don't have coverage can get coverage? in each of these areas what i'm going to do is start off by saying, here are some things we agree on. and then let's talk about some areas where we disagree and see if we can bridge those gaps. i don't know that those gaps can be bridged. and it may be that at the end of the day we come out of here and everybody says, well, we have some honest disagreements. people are sincere in wanting to
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help but they've got different ideas about how to do it and we can't bridge the gap between democrats and republicans on this. but i'd like to make sure that this discussions actually a discussion and not just us trading talking points. i hope that this isn't political theater where we're just playing to the cameras and criticizing each other but instead are actually trying to solve the problem. that's what the american people are looking for. as controversial as the efforts to reform health care have been thus far when you ask people should we move forward and try to reform the system people still say, yes. they still want to see change. it strikes me if we have an open mind, if we're listening to each other and not engaging in the sort of tit for tat and trying
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to score political points during the next several hours we might be able to make some progress. if not, at least we'll have better clarified for the american people what the debate is about. so with that, i just want to say, again, how much i appreciate everybody for participating and i am going to now turn it over to senator mcconnell so that he can make opening remarks and we'll go back and forth between the democratic leaders and the republican leaders, house and senate, and then we'll just open it up and start diving in. all right? >> thank you very much, mr. president. john boehner and i have selected -- >> this is the bipartisan health care summit. mitch mcconnell speaking now. we were listening to the president. carl and john harwood were also listening. did anything stand out to you? is that the tone and atmosphere you expected, guys. >> we knew he'd be talking to the public as much as the people in the room. i was first taken aback as to how he personalized the argument
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talking about his daughters and his grandmother and then the issue of focusing on where they agree, where they disagree. i don't know. your take on it. >> he personalized that part, too, citing by name the republican senators. >> first name. >> exactly. >> that you've had ideas that resemble things that we've done in our bill. that's exactly talking about mike enzi and chuck grassley, various members, paul ryan, who had some ideas on medicare. many of those members are going to walk out of this room at the end of the day and say, we are vastly different, vastly far apart from the president but what he is trying to do is communicate to the public that i'm being reasonable and i'm trying to bring us together and we'll see if we can do it. >> take a quick listen to what senator alexander is saying. >> and start over and let's go step by step toward that goal. and we'd like to briefly mention, i'll briefly mention and others will talk more about it as we go along, what those
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ideas are, what some of them are, what some of the suggestions we have are. i'd like to begin with a story. when i was elected governor some of the media went up to the democratic leaders of the legislature and said, what are you going to do with this new young republican governor a few years ago? and they said, i'm going to help him because if he succeeds our state succeeds. and they did that for us, and that's the way we worked for eight years. often they had to persuade me to change my direction to get our state where it needed to go. i'd like to say the same thing to you. i mean, we want you to succeed because if you succeed our country succeeds. but we would like respectfully to change the direction you're going on health care costs and that's what i want to mention here in the next few minutes. i was trying to think about if there were any kind of event that this could be compared with and i was thinking of the detroit auto show that you had invited us out to watch you unveil the latest model that you and your engineers had created and asked us to help sell it to the american people and we go
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and you do that and we look at it and we say that's the same moweaw last year and we didn't like it and neither did they because we don't think it gets us where we need to go and we can't afford it. so as they also say in detroit, again, we think we have a better idea. your stories are a lot like the stories i hear. when i went home for christmas, after we had that 25 days of consecutive debate and voted on christmas eve, on health care, a friend of mine from tennessee said, i hope you'll kill that health care bill. and then before the words were out of his mouth he said, but we've got to do something about health care costs. my wife has breast cancer. she got it 11 years ago. our insurance is $2,000 a month. we couldn't afford it if our employer weren't helping us do that. so we've got to do something. that's about -- that's where we are but we think to do that we have to start by taking the current bill and putting it on the shelf and starting from a clean sheet of paper. now you presented ideas. there's an 11-page memo on the,
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i think it's important for people to understand there is not a presidential bill. there are good suggestions and ideas on the web. we've made our ideas. but it's a lot like the senate bill. it has more taxes, more subsidies, more spending so what that means is that when it's written it'll be 2700 pages more or less which means it'll probably have a lot of surprises in it. it means it'll cut medicare by half a trillion dollars and spend most of that on new programs, not on medicare and making it stronger even though it's going broke in 2015. it means there will be about a half trillion dollars of new taxes in it. it means that for millions of americans premiums will go up because those, when people pay those new taxes, premiums will go up and they will also go up because of the government mandates. it means that from a governor's point of view there are going to be what our democratic governor calls the mother of all unfunded mandates. nothing used to make me madder
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as a governor than when washington politicians would get together and pass a big bill, take credit for it, and then send me the bill to pay. that's exactly what this does with the expansion of medicare. in addition it dumps 15 million low income americans into a medicaid program none of us would want to be part of because 50% of doctors won't see new patients. it's like giving someone a ticket to a bus line where the busest only run ha busest only run half the time. when fully implemented the bill would spend $2.5 trillion a year and still has sweetheart deals. one is out. some are still in. what's fair about taxpayers in louisiana paying less than taxpayers in tennessee? what is fair about protecting seniors in florida and not in california and illinois and wyoming? so our view, with all respect, is that this is a car that can't be recalled and fixed and that we ought to start over. but we'd like to start over.
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when i go down on the floor and i've been there a lot on this issue, some of my democratic friends will say, well, lamar, where is the republican comprehensive bill? and i say back, well, if you're waiting for mitch mcconnell to roll a wheel barrow in here with a 2700-page republican comprehensive bill it's not going to happen because we've come to the conclusion that we don't do comprehensive well. we've watched the comprehensive economywide cap and trade. we've watched the comprehensive immigration bill. we had the best senators we've got working on that in a bipartisan way. we've watched the comprehensive health care bill and they fall of their own weight. our country is too big, too complicated, too decentralized for washington, a few of us here, just to write a few rules about remaking 17% of the economy all at once. that sort of thinking works in the classroom but it doesn't work very well in our big, complicated country. it doesn't work for most of us. if you look around the table and i'm sure it's true on the democratic side as on the republican, we've got, you know,
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shoe store owners and small business people, and former county judge and we got three doctors. we've got people used to solving problems step by step and that's why we said 173 times on the senate floor in the last six months of last year we mentioned our step by step plan for reducing health care costs. and i'd like to just mention those in a sentence or two. you mentioned mike enzi's work on the small business health care plan. that's a good start. it came up in the senate. he will explain why it covers more people, costs less, and helps small businesses offer insurance, too, helping americans buy insurance across state lines. you've mentioned that yourself. most of the governors i've talked to think that would be a good way to increase competition. number three, put an end to junk lawsuits against doctors. in our state and half the
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counties pregnant women have to drive to the big city to have prenatal health care or to have their baby because the medical malpractice suits have driven up the insurance policies so high that doctors leave the rural counties. give states incentives to lower costs number four. number five, expanding health savings accounts. number six, house republicans have some ideas about how my friend in tennessee can continue to afford insurance for his wife who has had breast cancer because she has a preexisting condition and it makes it more difficult to buy insurance. so there are six ideas. maybe the first six ideas but combined with six others and six more they get us in the right direction. some say we need to rein in the insurance companies. maybe we do. but i think it's important to note that if we took all the profits of the insurance companies, the health insurance companies entirely away, every single penny of it, we could pay
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for two days of the health insurance of americans and that would leave 363 days with costs that are too high. so that's why we continue to insist that as much as we want to expand access and do other things in health care that we shouldn't expand a system that's this expensive. that the best way to reduce costs, increase access, is to reduce costs. now, in conclusion, i have a suggestion and request for how to make this a bipartisan and truly productive session. and i hope that those who are here will agree. i've got a pretty good record of working across party lines and supporting the president when i believe he's right. even though other members of my party might not on that occasion. and my request is this. before we go further today, that the democratic congressional leaders and you, mr. president, renounce this idea of going back to the congress and jamming through on a bipartisan -- i
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mean on a partisan vote through a little used process we call reconciliation your version of the bill. you can say that this process has been used before. that would be right. but it's never been used for anything like this. it's not appropriate to use to write the rules for 17% of the economy. senator byrd who is the constitutional historian of the senate has said that it would be an outrage to run the health care bill through the senate like a freight train with this process. so this is the only place, the senate, where the rights to the minority are protected and sometimes as senator bird has said the minority can be right. i remember reading the books by alexis which most of us have read and he said in "american democracy" the greatest threat to the american democracy would be the tyranny of the majority. when republicans were trying to
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change the rules a few years ago, you and i were both there, senator mccain was very involved in that, about getting the majority vote for judges. then senator obama said the following. what we worry about is essentially having two chambers, the house and the senate, who are simply majoritarian, absolute power on either side. that's just not what the founders intended, which is another way of saying the founders intended the senate to be a place where the majority didn't rule on big issues. senator byrd -- senator reed in his book writing about the gang of 14 said that the end of the filibuster requiring 60 votes to pass the bill would be the end of the united states senate. i think that's why lyndon johnson in the '60s passed the civil rights bills in the republican leader's office because he understood that having a bipartisan bill not only would pass it but it would help the country accept it.
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senator pat moynihan has said before he died that he couldn't remember a big piece of social legislation that passed that wasn't bipartisan and after world war ii in this very house and the room back over here, president truman and general marshall would meet once a week with senator arthur vandenburg of the senate foreign relations committee and write the marshall plan. general marshall said that sometimes van was my right hand and sometimes he was his right hand. we know how to do that. i mean, john boehner and george miller did that on no child left behind. mike enzi and ted kennedy wrote 35 bills together. you mentioned that in your opening remarks. you and i and many other senators worked together on the america competes act. we know how to do that. we can do that on health care as well. but to do that we'll have to renounce jamming it through in a
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partisan way and if we don't, then the rest of what we do today will not be relevant. the only thing bipartisan will be the opposition to the bill and we'll be saying to the american people, who have tried to tell us in every way they know how, town halls, elections, surveys, that they don't want this bill, that they would like for us to start over. so if we can do that, start over, we can write a health care bill. it means putting aside jamming it through. it means working together the way general marshall and senator vandenburg did. it means reducing health care costs and making that our goal for now and not focusing on the other goals. it means going step by step together to reearn the trust of the american people. we'd like to do that and we appreciate the opportunity that you've given us today to say what our ideas are and to move forward. thank you very much.
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>> well, thank you, lamar. both i and lamar went a little bit over our original allocated time. i am not one to be a hypocrite and wanted to give you some slack. we're going to have nancy and harry. my understanding is you guys want to split time? >> we are -- well. >> we'll split it up and then so we'll let them have some quick remarks. what i will then do is -- >> and with that, the marathon session on health care reform begins between the president, fellow democrats, and republicans. lamaralexander offering the republicans the first shot across the bow and that was a challenge to disavow the process of reconciliation which was not at least immediately answered by the president. >> we know the answer. the answer is no. the democrats have no intention of taking that option but, look. that was a shrewd choice by regimes. lamar is very temperate, very
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well-spoken, successful governor, he is somebody who might have been an effective president himself, ran a very credible campaign in 1996 for the republican nomination. came just short. and he laid out the case, the republican talking points, very succintly, well not quite so succintly against what president obama and the democrats are going to do. again, this is part of these two sides knowing what today is about. lamar alexander wanted not to have republicans sort of get off behind the 8 ball in the way they did when the house democrats or house democrats met with the president and stated their case very strongly. it's not going to be accepted by the president. >> well, if the idea was to leverage the president's performance in baltimore again today they'll be faced with perhaps just as effective republican communication skills. >> if they're all as effective as lamar alexander, yes. >> with that, we'll send it back to you in new york. >> thank you very much. we're continuing to monitor
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this. as well as ben bernanke. we have all of our juggling balls in the day. and a major market day. we'll hit that on the other side of the break, too. >> don't go away. we have a lot of market to cover. the dow is down 155 points. and here you see the most actives on the big board.
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we're back and not having a good day though we have stabilized. we have stopped moving lower and stabilized around minus oh, call it 1.4 to 1.5% on average on the major indices. let us check in with brian shactman first. >> you are on point because art cashin pointed out that 1088 is supported in the s&p and we've been sitting on it like a cushion for an hour. we're right at 1088 in the s&p. we'll see if that holds up. if it breaks to the downside we could have selling pressure further but right now we're sitting on top of it. it's broad based weakness. tech, energy, industrials really leading the way to the downside but hard to find a lot of green hours. i want to talk about some nuance stories here. hyatt and heinz came out with earnings. actually hyatt narrower loss than expected. heinz was pretty good.
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both companies said that overseas stronger than u.s. right now. so they're in tandem there. i want to point out in retail kohl's and limited came out today and, you know, those stocks doing much better than the general market. kohl's is cautious on guidance moving forward because of the volatile weather we've had in the u.s. whereas limited says february has been excellent because of the weather. i don't know which one to believe or who was right. maybe they both can be right. not so sure about that. it's interesting to note either way when they came out with their earnings reports. let's check on the tech sector which is weak as well. let's go to bertha coombs at the nasdaq. >> it's interesting. the s&p has basically been sitting right at around 1094 most of the month if you look at it. right now it is absolutely flat for the month of february. the nasdaq composite is up 1.5%. that's not to say we're not getting whipped around as well right along with the broader market today. palm is one of the big losers. a number of analysts got this call right. early this week they said they think the sales are weak for the palm pre and there are other offerings. they downgraded the stock and
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this morning the stock is off another 17% after the company warns. the big caps are all moving to the downside right along with we saw this gap down at the open and what we've done since then is pretty much flat line. a lot of traders talking about the fact that volumes are slow. lots of folks watching what's going on in washington. just continuing to be hesitant. a few sparks of green. altera earlier but overall chips the worst performers right now. express scripts, milan labs both on better earnings are about the only thing that's looking positive on the nasdaq 100. let's head down to the nymex now and sharon. this blizzard is probably getting folks busy down there. >> it does have folks busy but also as you said watching what is happening in washington. and taking some of the money off the table right now in oil and in energy and in commodities across the board here. we are looking at natural gas prices that saw a little bit of a selloff when we got that number from the energy department showing the decline in natural gas supplies. it was basically in line with
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expectations in the past week but we've paired those losses in the natural gas market. still, there are a lot of traders saying when you look at the weather we're having you'd expect to probably see more of a rally in tharl gnatural gas pri. if we don't get a big one it could drop to the $4 level perhaps next week. oil prices still down about $2 here below $78 a barrel. but keep in mind this is still toward the upper end of the range that oil prices have been trading in. even though we've had these poor jobless claims data, the poor consumer confidence numbers, and we continue to see -- continue to see gasoline support the market. today we're seeing the selloff in gasoline as the biggest drag in the petroleum complex. meanwhile taking a look at gold prices, gold also weaker today, down about $3 right now in the gold market. rick santelli, to you in chicago. >> well, thank you very much, sharon. there's so much going on. but i have to say the last couple hours the main thing being passed around, this is a two-year greek note. its yield yesterday was around
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5.75. its yield now is about 6.5. that's a big move. it isn't even the highest yield it's had. while all this is going on of course people are looking at the cds market for greece and saying things like, wow. there's hardly any offers. well, who would want to short that? there's no natural shorts. it's one of the problems many think with the whole concept of that contract. while all that is going on what do you think is going on with the euro currency? well, it's dabbling under 1.35 and just popped back up again. so flirting with potential, fresh nine-month lows against the greenback. all of that at the epicenter. oh, by the way, 32 million seven years at 1:00 eastern. now for more on this story i know somebody across the pond who could flush it in. that's guy johnson. >> let me put a little flesh on the bones as to what's happening over here, rick. markets have been responding in the same way they have over there. we've pretty much been down across the board. greece is down by nearly 3% this afternoon. the real concern surrounds the banks. let me quickly show you the
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session chart after the equity markets. give you a heads up on what's happening there. as you can see we've moved off. we are stabilizing a bit but the stoxx 600 down by 1.5%. this 1.35 level is critical euro/dollar. a lot of the chart technicals are getting very excited about this level. they are saying that this is the line in the sand to watch for. the issue is greece. the issue surrounds what is happening with these downgrades. now, last night s&p indicated that it could be getting ready to downgrade again. the critical thing happened this morning where moodies said it would as well. now, moodies is currently one notch above s&p and fitch. if it downgrades, it means the three ratings agencies are at critical level which would mean that greek banks can no longer use greek debt as collateral to take to the ecbf that happens and jean claude trichet has been quite clear on the fact that the rules will stick it would mean
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you could see a real crisis in greece happening almost instantly. that is why everybody is getting so concerned about what is happening here. it's this moodies story that everybody is watching. there are real concerns that greece is not able to meet its criteria it's been set by the european union. that's going to be a story for next week as well. we expect the bond auction. it's really all going to come together over the next few days. that is why everybody so nervous. bond yields a 350 spread over germany. they did get out to a record 400 but that story is beginning to really gather traction over here. mark and erin, back to you down there on the floor. >> thank you very much, guy johnson. we are down here on the floor with alan valdes and dr. know, gordon charlop. the vix is up 8%. my producer excitedly told me. >> he is so excited, jason. >> what does it mean, gordon? >> that the vix is up 8%? >> yeah. what does it mean? >> it means it's not down, mark. i'll try to go simple for you.
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that seems to be the level you're at these days. >> you also have to speak up a little. >> what we're seeing is just a little bit of a reversion. we are still stuck in sort of a tre trend here. just a bit of retrenching here. again, we stabilized right after the opening so we still don't see any significant sense of gloom and doom and, you know, it appears that's what we're going to have through the rest of this today and probably the rest of the month. >> alan, it looks like we're back into that thing where we keep bouncing the same hundred or 200 points back and forth across the net. >> yep. >> we'll see this all year i think, two steps forward, one step back. the news is going to dictate so much what happens here. today of course it's all about unemployment and you see that ticked up. more importantly the four-week average tipped up 6,000. that's the key more than anything else. and of course that's it. comes right in, market comes right in with that. that's basically what is pushing the market down today. >> anything stand out in terms of volume, names, anything?
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>> still seem to be a little light on volume. you have the situation where the institutions seem to be comfortable with their positions. they're backing off from trading. they're trading around their current positions but nobody really wants to give up what they have or get too aggressive based on the risk parameters relative to emerging markets or foreign markets. >> all right. gentlemen, thank you very much. we appreciate it. >> thank you. >> as we're down 150 as i said we hit the 150 down and we're sitting right there. matt nesto has some names on the move. mr. nesto? >> there's not a lot of movers and advancers, only 31 of 500 in the s&p 500 that are higher here today. iron mountain one of the names we haven't touched on a lot here today the company out with all kinds of news, all kinds of results, all kinds of guidance, all kinds of new dividend news, all kinds of buyback and the market is pushing it high erl by 7%. that's a four-month high for irm. iron mountain. a big blowout quarter, 27 versus 23 the forecast for the full year and the current quarter both above consensus.
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john deere has hired goldman sachs to review strategic options for their wind business. you maybe didn't know they had a wind business. oh, yes they do. in 34 states they have been at it for five years. nothing has been decided yet. they're just kind of reviewing those options. stock is down about 1.3%. actually performing better than the broader industrial sector today. milan labs, you heard a little bit on that earlier. 5.5%, one of the best performers in the s&p 500. again, strong revenues, strong results, and a reiterated forecast that looks to be greater than or equal to. and then lastly, nike says or goldman sachs says just buy it. for nike. i messed that up. that was going to be funny, too. i guess. nike on the conviction buy list at goldman the target price 78 chlgt they say they see near-term top and bottom line growth. they like the valuation. they say it's traileding at about a 12% discount to its historic average. not a peep not a peep about tig
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even golf in the entire report, though, and nike inching higher by about half a percent. mark, back to you. >> thank you, matt nesto. okay, coming up, ben bernanke is still talking. what's he saying? we'll bring you up to date. >> we dropped the 150 and now stocks are digging in their heels. is it possible we'll get a turnaround today? we'll talk about it. we'll be back. okay.
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once again, the market has kind of stabilized. the dow is down 150. where this big shot down at the beginning and that has been kind of flat at this lower level. meantime, bernanke's been talking. >> talking. >> the president's been talking. >> talking. >> lamar alexander has been
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talking. >> talking a lot. let's find out what steve liesman thinks about all of the talking. >> let me just talk about bernanke because that's what i've been listening to, mark. just a moment ago senator gregg took the floor for questioning of fed chairman ben bernanke and he joined evan bayh expressing the regulatory authority. the importance of that is because senator dodd wants to take that away. probably the most important thing is that the fed is looking into "the new york times" front-page story about the cdss held by greece. let me read you the quote from the fed chairman. we're looking into a number of questions related to goldman sachs and other companies and their derivative arrangements with greece. also the fed chairman said that the economy is still weak and that is disappointing. a big uncertainty is will growth be fast enough to reduce unemployment. he said if congress is going to
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do additional stimulus, one way to do it would be to combine it it with specifics on an exist policy from the large debts and deficits of the united states five years down the road. let's see what else here. >> he did say that bad weather could possibly have affected these large jobless claims we saw with the 22,000 jump in this week. mark? erin? >> thank you very much, steve liesman. one other headline that came out just as steve was talking was ben bernanke is not worried about china's economy overheating. i know there are some hedge fund managers publicly so, like jim chanos who would beg to differ with that. >> not to be cynical, but if bernanke were concerned about china overheating would he say so publicly. >> no, but i think here's what he would do. he would avoid coming on the record one way or the other. >> yeah. you're probably right. >> maybe i'm being too optimistic about it. >> you're probably right. >> john o'donnell is with us.
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what do you think about that statement, john? >> the chinese statement? >> yes. he says the chinese economy is not overheating. >> tend to agree that if he didn't want to say anything he wouldn't have said anything, he stepped aside. there's an enormous amounts of diverse opinion on that one and mr. chanos is probably at the forefront as to what he thinks there. so that's a story that will evolve over time, that's a managed economy much more so than a free market economy and there are safety pinnings there. >> we had the big plunge and now we're sitting right within the range. what are you looking at technically or fundamentally here? >> a couple of things, erin. the market from the 1150 range in the s&ps had almost a picture-perfect correction and bounced back to the 1100 level. i feel like we're going to be stuck in a range for quite some time, unfortunately, but i think within the range you can pick your poison, if you will, as to
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what you want to invest in or trade in. what we have seen and what we've talked to you guys in the last few weeks. the stocks that are exposed on on. >> i'm sorry. we have to interrupt you there. i apologize for that. >> that's because i believe the show is over, right? >> now!
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